With Bitcoin’s sudden rise at the end of 2017, Blockchain has become a mainstream term. However, many people still don’t understand this technology’s incredible potential, especially in its role in the supply chain and warehouse digitalization movement.

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This article will be your primer on Blockchain technology, its potential in warehouse operations, and its performance in the industry.

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    What is Blockchain?

    Blockchain is a distributed ledger technology that securely exchanges record transactions between parties. It is a chain of data blocks that all computers in a network share, making them accessible to relevant parties.

    Blockchain embodies three main features: accessibility, security, and accountability. As the data is shared, it provides access to all parties involved. Every computer stores the data, making it decentralized and distributed, thereby ensuring high security. Hackers would need to access and alter the data on all linked computers simultaneously just to change one transaction. As a single, fixed cache of information, Blockchain ensures that everyone in the network is accountable.

    Blockchain - Definition

    This distributed approach to data management makes Blockchain a preferred platform for protecting data, increasing accountability, and making it easily accessible to the intended parties.

    Blockchain’s Role in the Warehouse

    All supply chain stakeholders, including the warehouse, must collaborate seamlessly to achieve excellence in logistics. Involving numerous entities with complex technologies can lead to poor collaboration and restricted transparency. Blockchain will link relevant parties on the same data platform while guaranteeing data security and easy communications.

    This unified ledger can automatically update new data when paired with IoT (Internet of Things). For example, meat in transport must maintain a temperature of 4°C or less. With Blockchain and IoT, it is possible to verify and record its temperature at every step of the supply chain while keeping the data protected and accessible. This makes verification easy for the whole supply chain as both technologies report the food’s state.

    Also, Smart Contracts, self-executing contracts with terms of agreement between two parties written into lines of code, can be utilized by the warehouse to automate verifications and payment. For example, when a connected pallet is delivered, the received confirmation, time of delivery, and condition will be transmitted to the Blockchain system to be verified, so long as they are in the agreed conditions. If verified, proper payments will be released to the appropriate parties. This type of automation greatly increases efficiency, integrity, and security.

    Blockchain - Smart Contracts

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    Where is Blockchain in the Industry Now?

    According to the MHI Annual Industry Report 2020, only 33% agreed that Blockchain could disrupt the industry or provide a competitive advantage for their business. In addition to that, the report cites the following adoption rates over the next few years:

    Blockchain - Adoption

    We will use three adoption frameworks to determine blockchain’s position in the industry: the S-Curve of Innovation, the Technology Adoption Life Cycle, and the Hype Cycle.

    S-Curve of Innovation

    Blockchain is currently between the Ferment and Takeoff stages of the S-Curve. To be more specific, it is close to reaching the Takeoff phase, which indicates that the technology is close to overcoming a significant obstacle. The majority of early adopters have not yet accepted it at this stage.

    Blockchain - S Curve

    Technology Adoption Life Cycle

    Blockchain is now being adopted by the Early Adopters. As mentioned by the 2020 MHI Industry Report, 10% of the respondents are using Blockchain, which puts it above the Innovators group but not yet at the point of crossing the chasm.

    Blockchain - Adoption Life Cycle

    The Hype Cycle

    Gartner has placed Blockchain at the start of the Peak of Inflated Expectations. This position in the curve means that Blockchain is about to receive its highest publicity. However, despite the promotion, it is still unclear whether the technology will become a success or a failure. However, projects like IBM’s Blockchain supply chain are steadily pushing it out of the hype and into the supply chain industry. Ginny Rometty, IBM’s CEO, even said…

    “What the internet did for communications, Blockchain will do for trusted transactions.”


    The Hype Cycle also suggests that Blockchain will reach the plateau in 5 to 10 years, meaning potential adopters still have time to evaluate the pros and cons.

    Blockchain - Hype Cycle

    Blockchain is slowly moving from being an edge to an opportunity that will later become essential. Big names such as Walmart, UPS, Maersk, FedEx, British Airways, and Samsung are implementing the technology in their supply chains. Startups built as recently as 2017 are using Blockchain as their core technology or edge in the market.

    Blockchain in supply chain management will strengthen the collaboration and data sharing that the industry has sought for many years. It will also address long-prevailing concerns such as security, privacy, and control over data. No doubt, this emerging technology is something that supply chain leaders must not ignore.

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